Texas PUC Agrees On Mechanism To Prevent Retail Providers From Gaming Uplift Opt-out Mechanism

The Texas PUC at its meeting last week agreed on a process to prevent retail electric providers from gaming the opt-out mechanism under the uplift securitization program

As previously reported, the ability to opt-out of the financing program is extended to a retail electric provider that has the same corporate parent as each of the provider's customers and a retail electric provider that is an affiliate of each of the provider's customers

Commissioners agreed that any REP electing to opt-out should not be permitted to change its REP-type (e.g. moving from Option 2 to Option 1) as a means of gaining an unfair advantage by being able to serve a broader universe of customers while avoiding the nonbypassable uplift financing charges

A draft order memorializing the Commissioners' agreement provides that, "It is necessary and appropriate that a REP that opts out of uplift charges not gain an undue market advantage by changing the option under which it is certificated at the time it opts out by precluding such opt-out REP from amending its certification to allow service under a different option."

"Opt out REPs should not be precluded from forming a new entity to enter the market and obtain a REP certificate under any available option, but which will not have opt-out status," the draft provides

Thus any such new REP would be subject to the uplift charges.

The draft would also provide that two months of projected uplift charges for each obligated LSE would be the appropriate amount of collateral that ERCOT may require from QSEs representing obligated LSEs.

Docket 52322